I don’t like this latest thing by the POTUS:
President Donald Trump announced he had instructed Treasury Secretary Scott Bessent to have the Treasury Department stop making new pennies, explaining that it costs more than two cents to make them.
Yes, it makes sense on a facile cost : benefit basis, but what it does is surrender to the trope that inflation (created by government in the first place) has rendered the penny valueless.
Why not work to rein in inflation and lower prices so that a penny becomes worth something again?
Oh wait; that would be more difficult than just quitting on the penny.
I agree that it would be nice to see prices come back down, but I’m regularly assured that deflation is a bad thing (because reasons).
I don’t know the answer. Hopefully reining in government spending and waste will help, but short of re-valuing the currency (cutting a zero off the end of all prices, investments, and savings) I don’t see us getting back to pre-Nixonian prices.
Maybe going back onto the gold standard would help? I’ve seen assertions to that effect, but my understanding of the intricacies of fiscal policy and economics is not as comprehensive as I’d like.
Meh “reasons”. Deflation is bad because when money starts becoming more valuable just sitting in a jar, there is little to no incentive to invest, so it very quickly drives investment (and thus te economy) into the ditch. Then, since other investments start to tank, investors switch to cash, which drives up the value on money relative to assets even more and drives deflation that much more.
A deflationary cycle characterized the early years of the Depression, so stuff was cheap and no one had money to buy anything. It is ugly (and FDR then made it worse because he and his crew thought it was caused by too much competition rather than monetary factors).
“ Why not work to rein in inflation and lower prices so that a penny becomes worth something again?
Oh wait; that would be more difficult than just quitting on the penny.”
Unfortunately that’s not going to happen. The damage Biden and the Democrats and the RINO’s did is bad enough where Trump has to stop the bleeding and create a new normal.
I believe Trump can fix some of the economy and make things better for the working man and woman (2 genders NOT 100) – however the penny is never going to be worth much ever again.
“ Maybe going back onto the gold standard would help?”
USA should never have come off of the gold standard however the dollar has been so inflated if the dollar was put back to the gold standard there would probably have to be a 1,000 to 1 ratio. Again this could stop the bleeding but we are not going back to the pre Covid prices and ways.
Also while I am in support of a gold standard for currency, gold is overrated in one major way among many, if there was a huge disaster (hurricane, massive blizzard, earthquake, war) and some schlub showed up and said hey I will give you X amount of gold for food, water and ammo, most intelligent people would laugh and tell the moron to dial 1-800-EAT-SHIT We do however have many stupid fuckers in this country though.
One more thing on prices is vehicles. Since Covid new and used vehicles are insanely priced. Some of that is materials and labor and some of that is pure speculation. Either way, sales of new cars are slowing because quality on brand new post Covid is shit and prices are insane. Many dealers (not all) soon will be left with lots of inventory of new cars. Many 2024 still on many lots now.
However used cars, “modern classics” (1990 to 2015 ish) are all being bought up as they are more affordable than new and higher quality then brand new.
The Democrats, RINO’s and Covid butt fucked this country raw dog no lube.
Trump is trying to stop the bleeding and create a new normal where things are comfortable die the working class. So far he is doing good. The penny however is not going to be worth much long term.
“new normal where things are comfortable die the working”
FOR the working class. Fuck. The iPhone spell check absolutely sucks.
…….prices are insane. Many dealers (not all) soon will be left with lots of inventory of new cars. Many 2024 still on many lots now.
To your point from a friend in the bank/car finance business:
Prices on new trucks are up ~40% since 2020.
Dealers currently have ~400+ day inventory of unsold new trucks and EVs.
great. Now stores will just round to a nickle and screw the customer
The hell with the gold standard, just start making pennies out of pure copper again and they’ll be worth something! If nothing else, I can drill out the middle and use them for washers. The shit they make now is too fucking brittle. Bring back the Copper Standard.
First you’re going to need to find vast amounts of copper ore to bring the price ofcopper down, because I don’t know if you realize it, but copper is rather expensive. It’s far more useful as an electrical conductor than as a nearly valueless coin rattling in your pocket. Modern copper-plated zinc pennies are going away because they cost several times more to make than their face value. Make them out of copper and watch the price of a penny double while the value remains the same. Now you’ve increased the deficit for no reason other than for tweakers to melt down and sell as scrap like all the other copper shit they steal to convert into cash, then drugs. You could make pennies out of gold and the only thing that would happen is they’d disappear from circulation a whole lot faster.
Maybe they’ll just start dropping zeros off the end of our currency ala Zimbabwe.
We got rid of the penny here in Canada years ago. It was actually a good government idea for a change.
Store prices did not change. If you paid with a card you paid the exact amount. If you paid with cash the stores rounded down. I started paying with cash to save as much as 4 whole cents here and there until I realized that it was a pain in the ass for me and the cashier.
Also don’t for get one minor good part of inflation. Wages are sticky – nobody accepts a pay cut without screaming. With some inflation unproductive employees just don’t get raises and eventually wind up getting paid what they’re worth.
Except for government swine at all levels with their indexed pay and pension packages.
Anyway, here’s my cure for inflation – all legislators and government employees are to be paid in constant dollars – no inflation based or related increases ever for the life of the individual involved starting on day 1 of government “service”, I mean parasitism.
“Why not work to rein in inflation and lower prices so that a penny becomes worth something again?”
How much time do you have?
Perfect is price stability, but a gold standard does not do that. A gold standard is a good thing, true, but its value is in limiting the government’s ability to inflate currency (assuming governments are honest in tying their currency to actual gold – and since when are governments ever honest?). It has a huge downside, however – a gold standard frankly doesn’t allow for a growing economy; if there are far more goods and services, and the money supply (tied to gold, remember) stays fixed, prices start to fall. There simply isn’t enough money for persons to use money for its intended purpose – remember, money is not a store of value, it is a medium of exchange. And if there is not enough of it, it cannot fulfil that purpose. People will still trade, but they’ll go back to barter in some form. Nothing wrong with that, except that it is far less efficient.
The opposite is too much money; we all know what that result is.
The Fed has a target of 2% inflation. I don’t know why 2% is OK – my suspicion is that the Fed is terrified of deflation, and with good reason. It has all the downsides noted above, as well as discouraging investment and productivity. No one produces stuff if the value of the stuff you’re producing is going down. Why would you? So because deflation is so damaging, the Fed is willing to live with 2% inflation.
Perfect, of course, is a currency that tracks with increases in productivity and growth perfectly – a 0% inflation. If anyone knows how to do that, please let me know. And call the Fed. Such perfect knowledge, of course, is limited to God alone. And He’s not running the Fed.
So we live with the devil we know, better than the devil we fear.
End of the day, of course, gov’t doesn’t set prices; we do, every time we purchase a good or service. A product or service is worth exactly what you are willing to pay for it.
Abolishing the penny should have been done decades ago, but no one had the political will to do so. You won’t even notice they’re missing; how many of you use cash on a regular basis? If you’re using an electronic transfer, like a debit or credit card, the loss of the penny means literally nothing. Even if we use them, we don’t really use them. Every year, a substantial number of those minted disappear from circulation, and we all know why. We don’t even bother to carry them. We hardly bother to pick them up. They are throw-away coins, and they end up in a jar by the bed, or on a desk, or in a drawer, or wherever.
BTW – I read that it takes 11 cents to make a nickel. It’s also in danger of expiring. Digital currency is coming. I don’t think that’s a particularly good thing, but it simply is. Time to get into bitcoin, folks! (just kidding; I don’t understand what that is at all).
Pennies are demonstrably not worth anything; people literally will not bend over to pick one up. According to an article I saw today it costs 3 cents to make & manage each penny. So on one level it makes sense to stop producing them. On the other hand, de-currencying the penny means the demand for nickels will go up and it costs (IIRC) 13 cents to make nickels due to the higher cost of metals so we’d end up spending more in the long run.
That.
Make pennies out of aluminum and they’d only cost only a bit more to make than they’re worth. Some Filipino coins are aluminum or something equally cheap. If you think a penny has no value, just think how very, very little worth a Filipino centavo has. It’s almost 58 pesos to the dollar, so 58 centavos to the penny. It was 25 pesos to the dollar when I was stationed there.
Most of a century of purposeful inflation can’t be undone in much less time without causing economic havoc. The penny might as well be ditched, and maybe brought back later, if necessary.
Eugene Oregon.
Several local-owned family-operated businesses ’round down’ at check-out.
If the register total is us$12.53 and I hand thirteen fedbux to the kosher, my change is four bits.
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[For foreigners:
One fUSA fedbux is conveniently divided into quarters.
During olden times, a quarter fedbux coin was known as ‘two bits’.
Apparently, this popular piano ‘rag’ is the foundational source of frequent railroad whistles!
https://youtube.com/shorts/tAWqfrkUs68?si=QkIKLfqbppOqtb08
]
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*****
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Speaking of bad bad horridly-awful pennies, “Iowa has too many Northern European Heritage farmers…”:
https://youtu.be/Yb-57a1Ys0M?si=vOxWDEDVtztmWwdo
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Do Detroit and Memphis have too many schvartzers and Mohammedans?
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An aside:
I think that dude would be pretty with longer eyelashes…